Peggy is a stock trader for a small company. Her performance evaluations have always been positive. However, 3 months ago the company hired a new trader whose performance is much better than all of the other traders, including Peggy
At her next evaluation, Peggy's boss tells her that she is underperforming and must do better. This is likely an example of
A) the halo effect.
B) trait affectivity.
C) the contrast effect.
D) stereotype threat.
Answer: C
Rationale: The contrast effect occurs when a rater evaluates one employee who is very strong in a number of dimensions such that, by comparison, the next employee is likely to appear weak, even if he is an average worker by other measures. In this example, Peggy's performance seems poor only because it is being compared to the new employee.
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